Israel says it will continue building in east Jerusalem despite pressure from the US to end construction in areas the Palestinians claim for their future state.
A statement from Benjamin Netanyahu's office today said "the prime minister's position is that there is no change in Israeli policy on Jerusalem."
The statement was issued before Mr Netanyahu convened a meeting of key ministers to formulate a response to the Obama administration's demands for Israeli peace gestures amid a high-profile diplomatic row between the two countries.
Washington has been trying to jump-start Israeli-Palestinian talks. It says Israeli building in east Jerusalem, where Palestinians hope to make their future capital, is provocative and prejudges the outcome of negotiations.
Israel and the United States failed to resolve the issue of expanding Israeli settlements in occupied Jerusalem during Prime Minister Benjamin Netanyahu's visit to Washington, a spokesman for the Israeli leader said today.
A "list of understandings" had been reached but disagreements remained on terms for renewing peace talks with Palestinians, Mr Netanyahu's spokesman Nir Hefez said in an interview earlier.
Mr Hefez had earlier told Israeli Army Radio the understandings Israel had achieved included "construction policy in Jerusalem doesn't change." But he later clarified that he meant Israel's position had not changed, not that Washington had agreed to it.
In a statement, Mr Hefez said what he had told the radio "was related only to Israel's position and did not at all relate to the American position."
He gave the interview before a scheduled meeting of senior cabinet ministers toiday to debate proposed gestures to Palestinians to revive peace talks stalled since late 2008.
Mr Hefez said that in addition to understandings achieved by Netanyahu in his three days in Washington including a 90-minute session with US president Barack Obama at the White House on Wednesday "there were additional points still in disagreement."
The Obama administration had also objected to Israel's latest settlement plans for occupied East Jerusalem, including a blueprint for 1,600 housing units published while Vice President Joe Biden was visiting, igniting new controversy this month.
Israel captured East Jerusalem and the West bank in a 1967 war and annexed the city in a move not recognised internationally. Palestinians want East Jerusalem as capital of a future state they seek in the occupied West Bank.
Reuters